Moody’s drops Affinion PDR, notes

Moody's Investors Service said it downgraded Affinion Group Holdings, Inc.’s probability of default rating to Ca-PD from Caa2-PD and Affinion Investments, LLC’s 13½% senior subordinated notes due 2018 to Ca from Caa3, reflecting elevated probability of default in the near-term in light of the company's planned restructuring of its capital structure.

Affinion Holdings' 13¾%/14½% senior secured PIK/toggle notes due 2018 were affirmed at Ca.

Affinion's all other ratings, including its Caa2 corporate family rating and existing debt instrument ratings not subject to the exchange, are not currently impacted.

The outlook remains negative.

On Sept. 30, Affinion announced it reached a support agreement with majority of its noteholders to help facilitate balance sheet recapitalization. The company launched offers to the holders of $360 million 13½% senior subordinated notes due 2018 and $260.5 million 13¾%/14½% senior secured PIK toggle notes due 2018 to exchange debt for common equity.

Moody's will consider the debt-for-equity swap affecting Affinion Holdings and Affinion Investments existing notes as distressed exchanges since it alleviates a capital structure that the agency views as being unsustainable over the medium-term, and also results in a significant economic loss to the bondholders.

Moody's will append Affinion's probability of default with an /LD designation at the close of the debt exchange indicating limited default, which will be removed after three business days. Post debt exchange, aforementioned noteholders will own substantially all of the equity in the company.

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